I do yoga four times a week when I am not traveling. I also work out, sometimes on days when I am not doing yoga. So, I have a fair number of pieces of yoga wear and other athletic clothing. This means that I get regular mail and email solicitations from the firms that purvey these clothing items.

I recently received a catalog from one of my favorite athletic clothing brands, Sweaty Betty, which I discovered originally when I was teaching in Cambridge, England in one of our study abroad programs a few years ago. I noticed, with some amusement, that the new catalog harps on the opacity of the firm's yoga bottoms or trousers (as the British like to call them). The website does the same--"100% opaque" labels abound. As an astute consumer and securities lawyer, I immediately jumped to the conclusion, whether right or wrong, that this yoga-bottoms advertising campaign is a reaction to the see-through yoga pants debacle of one of Sweaty Betty's competitors, Lululemon (another of my favorite brands).

What does business law have to do with this (apart from the many standard legal angles on the recall of products generally)? As my securities regulation students from last spring well know (since it was the subject of part of their final exam), stockholders of Lululemon brought a securities fraud class action suit against Lululemon, after the recall of the see-through pants, based on alleged misrepresentations of material fact in public disclosures touting the high quality of its yoga pants. Predictably (at least imho), the District Court dismissed the action back in April. The court's opinion and order resulted in a few interesting online law firm commentaries with colorful titles (including posts from, e.g., Orrick and Weil). The public fallout also includes (as most would guess) allegations of breaches of fiduciary duty and observations about insider trading and Rule 10b5-1 plans because of some well-timed trades by Lululemon's founder and then-CEO.

As we think about the new semester (ours starts on Wednesday), the Sweaty Betty catalog reminded me to bring the Lululemon matter to the attention of our law faculty readers. The facts and public reactions make for a nice case study of risk management in the context of securities regulation and fiduciary duty law. A Stanford "Closer Look" piece, as well as many news reports, make the use of the case reasonably easy. And for those of you who want to take a peak at my exam question, just ask . . . .

Comments

In high school, I had an ongoing debate with my then cheerleader girlfriend about the definition of “sport.” Most dictionary definitions mention “competition”. My claim was, while I appreciated her cheering for our football team, that cheerleading was not a sport because of the absence of competition. (I willingly admitted that cheerleading might be considered a sport, under a broad definition, if and when they engaged in team competitions – with scoring, winners, losers, etc.) I am sure there are much more nuanced definitions of “sport,” but the competition part seems key to me. As such, I don’t think yoga qualifies…but at least you knew you were stretching (pun intended?).

Posted by: Haskell Murray | Aug 19, 2014 8:09:50 AM

Glad you noted the "stretching" usage. Thanks.

Of course, the link I provided was to a yoga competition. But you'll never see me doing that kind of thing . . . . And cheerleaders also compete. But neither of these physical activities requires competition. So, I take your point in any case.

Posted by: joanheminway | Aug 19, 2014 8:20:29 AM

...proving that I should read the linked to articles... I never imagined yoga competitions, but I guess it is possible. As I suggested, I am sure more nuanced definitions of "sport" have requirements beyond just the possibility of competition. There are quite a lot of things that could be turned into competitions that we probably wouldn't think of as "sports." Speaking of sports....I couldn't be more exited that football is back!

Posted by: Haskell Murray | Aug 19, 2014 8:31:26 AM

The only question is . . . who will win the SEC? One of us needs to blog about college football and business law--but maybe not the highly publicized NCAA issues.

Posted by: joanheminway | Aug 19, 2014 8:48:04 AM

FWIW, Jonathan Duhamel was nominated for Canadian Athlete of the Year after winning the World Series of Poker Main Event ;)

Posted by: Stefan Padfield | Aug 19, 2014 9:27:24 AM

On Poker: I think a certain level of hand-eye or foot-eye coordination should probably be a requirement. (And no, pushing your chips into the center does not count...)

On the SEC: I always think Georgia looks really good about this time of year, but they always manage to have a few key suspensions (at least two starters on defense already this year), a few key injuries (no big ones yet, though they have only been practicing), and a few heart-breakingly close losses (that Auburn game last year was the worst of the worst - though Alabama in the SEC championship game a couple of years ago was very bad too). Hoping this year will be different.

Posted by: Haskell Murray | Aug 19, 2014 10:20:46 AM

Your chips are to your left. Your opponent is to your right. You have sunglasses on and are facing your chip stack, but while it looks like you are focusing on grabbing the right amount of chips you are actually watching your opponent out of the corner of your eye to get a read on his reaction to your impending bet. Not everyone has the dexterity to pull that off ;)

Posted by: Stefan Padfield | Aug 19, 2014 10:34:09 AM

FYI. I believe a couple of States have designated cheerleading as a sport in order to regulate the activity under their sports association (e.g., number of days, amount of time, physical protection, etc.).

One thing I would add is that I recollect we "he men" in "football condition" thinking it would be cute to attend and participate in "step cardio." The scenery was quite attractive and we thought it a lark. We left "dragging" our "tails between our legs." Different training - different muscle memory. There was a reason Lynn Swan (dating myself) valued ballet and alternative exercise!